ONTD Political

BP settles criminal charges for $4 billion in spill; supervisors indicted on manslaughter

5:33 pm - 11/15/2012
BP has agreed to plead guilty to 14 criminal counts, including manslaughter, and will pay $4 billion over five years in a settlement with the Justice Department over the 2010 oil spill in the Gulf of Mexico, the company and Justice Department announced Thursday.

In addition, the London-based oil giant will pay $525 million over three years to settle claims with the Securities and Exchange Commission, which said the company concealed information from investors.

“This marks both the single largest criminal fine – more than $1.25 billion – and the single largest total criminal resolution... in the history of the United States,” Attorney General Eric Holder said during a news conference in New Orleans. “I hope this sends a clear message to those who would engage in this wanton misconduct that there will be a penalty paid.”

Holder also announced a separate 23-count criminal indictment — including charges of seaman’s and involuntary manslaughter — against the two top-ranking BP supervisors on the Deepwater Horizon drilling rig where a blowout occurred April 20, 2010, sinking the rig and killing 11 workers.

Holder also announced an indictment against David Rainey, a BP vice president, for hiding information from Congress and lying to law enforcement officials about the rate at which oil was gushing into the Gulf of Mexico.

“Make no mistake: While the company is guilty, individuals committed these crimes,” said Assistant Attorney General Lanny A. Breuer, head of the criminal division. Of the two rig supervisors, Breuer said: “In the face of glaring red flags indicating that the well was not secure, both men allegedly failed to take appropriate action to prevent the blowout.”

BP said it would increase its existing $38.1 billion charge against earnings for the spill by $3.85 billion.

The criminal settlement does not cover federal civil claims, including Clean Water Act claims, federal and state claims of damages to natural resources or private civil claims. Settling those would probably cost BP billions of dollars more, and the company said it is “prepared to vigorously defend itself against remaining civil claims.”

But the settlement resolves a variety of criminal charges. BP agreed to plead guilty to 11 felony counts of misconduct or neglect of ships’ officers relating to the loss of 11 lives on the drilling rig that caught fire and sank; one misdemeanor count under the Clean Water Act; one misdemeanor count under the Migratory Bird Treaty Act; and one felony count of obstruction of Congress. BP said that the last of those is related to misreporting to a member of Congress the rate at which oil was gushing into the gulf.

The settlement is subject to U.S. federal court approval.

“All of us at BP deeply regret the tragic loss of life caused by the Deepwater Horizon accident as well as the impact of the spill on the Gulf coast region,” Bob Dudley, BP’s chief executive, said in a statement before Holder’s announcement. “From the outset, we stepped up by responding to the spill, paying legitimate claims and funding restoration efforts in the Gulf. We apologize for our role in the accident, and as today’s resolution with the U.S. government further reflects, we have accepted responsibility for our actions.”

“We believe this resolution is in the best interest of BP and its shareholders,” Carl-Henric Svanberg, BP’s chairman, said in the statement. “It removes two significant legal risks and allows us to vigorously defend the company against the remaining civil claims.”

The criminal plea could complicate BP’s efforts to contain the cost of civil claims, but the company said 13 of the 14 criminal charges “are based on the negligent misinterpretation of the negative pressure test conducted on board the Deepwater Horizon.” BP said that it “acknowledged this misinterpretation more than two years ago” and insisted that the agreement today “is consistent with BP’s position in the ongoing civil litigation that this was an accident resulting from multiple causes, involving multiple parties, as found by other official investigations.”

“It’s obviously not cheap. A $4 billion settlement is pricey for anyone, even a company this size,” said Pavel Molchanov, an oil analyst at the investment firm Raymond James. But, he said, “it’s a positive step” from an investor’s point of view. “By eliminating the criminal overhang, the inference is that BP can afford to be more aggressive in dealing with the civil claims,” he said. “They no longer have to fear the criminal stick.”

At 3 pm, BP shares were up about 0.2 percent to $40.37.

BP said that the $4 billion settlement with the Justice Department includes $1.256 billion in criminal fines, $2.394 billion to be paid to the National Fish and Wildlife Foundation, and $350 million to be paid to the National Academy of Sciences.

“The fines and penalties that the Justice Department has demanded BP pay are appropriate for such a massive disaster,” Rep. Edward J. Markey, the senior Democrat on the Natural Resources Committee, said in a statement. “People died, BP lied to Congress, and millions of barrels of oil poured into the Gulf. This steep cost to BP will provide the Gulf coast some of the funds needed to restore the region, and will hopefully deliver some comfort and closure to the families and businesses affected by the spill.”

It was unclear how BP’s plea would affect its ability to bid on contracts to supply fuel to the U.S. military. BP has been a major supplier of fuel to the Pentagon in the past. But analysts expect that it will not impair the company’s ability to lease areas of the Gulf of Mexico or explore for oil and gas there. The company said that it “has not been advised of the intention of any federal agency to suspend or debar the company in connection with this plea agreement. BP will continue to work cooperatively with the debarment authority.”

Under the terms of the plea agreement, BP has also agreed to to further “enhance” the safety of drilling operations in the Gulf of Mexico. These steps relate to BP’s risk management, including third-party auditing and verification, training, and well control equipment and processes such as blowout preventers and cementing. In addition, BP has agreed to several initiatives with academia and regulators to develop new technologies related to deepwater drilling safety.

The agreement also provides for the appointment of two monitors, both with terms of four years. A process safety monitor will review, evaluate and provide recommendations for the improvement of BP’s process safety and risk management procedures concerning deepwater drilling in the Gulf of Mexico. An ethics monitor will review and provide recommendations for the improvement of BP’s code of conduct and its enforcement, the company said.

So far BP has spent $14 billion responding to and cleaning up the spill. It has also paid out $9 billion mostly to individuals and businesses. Additional private civil claims are being pursued in a separate lawsuit in a New Orleans federal court, where a settlement that BP estimates will cost $7.8 billion is being finalized.

The BP settlement with the Justice Department is not expected to cover other companies involved in the April 20, 2010 accident, including rig owner and operator TransOcean and cement contractor Halliburton.

Source

From Reuters: "Transocean disclosed in September that it is in discussions with the Justice Department to pay $1.5 billion to resolve civil and criminal claims."
natyanayaki 16th-Nov-2012 02:25 am (UTC)
I know that this should give me closure, but I see the dead bodies of baby dolphins, birds covered in oil, untold numbers of fish killed...and ugh...I can't help but think it's simply not enough.
caterfree10 16th-Nov-2012 03:28 am (UTC)
I remember seeing this on the local news earlier today. There was a part where it showed the impact on the environment there and there was *still* oil on the ground in a marsh and the soil erosion was more than 20 feet since the oil spill - twice the rate than it was before, iirc. It's really sad, though I don't know how or even if this will help restore those lands.

At the very least though, I'm glad that BP is having to pay up for their mess.
romp 16th-Nov-2012 03:29 am (UTC)
Thanks for the update. I had no hope when it happened of any fines and I really like the idea of holding individuals responsible, the higher the better. Sounds like this is going to drag out for decades though. I suppose that's BP's plan so they can make more money while they delay.
wathsalive 16th-Nov-2012 04:41 am (UTC)
$4 billion is more money than I can imagine but wikipedia says BP made 386 billion in 2011 and a net income of 25 billion. I can see why they agreed to settle for 4 billion.
halfshellvenus 16th-Nov-2012 04:58 pm (UTC)
Finally, some closure for the families of the people who were killed by "business decisions."

I know the long-term environment effects still haven't been adequately dealt with, and the people and animals that live in that area will suffer the effects for a very long time to come. But that disaster was avoidable, and pursuing money over safety cost workers' lives as well as the environmental disaster.

Employers should not be allowed to endanger their employees this way. The employee really can't refuse without losing his/her job.

365reasonswhy 17th-Nov-2012 12:38 am (UTC)
MTE. I'm glad the people responsible for the bad decision making that led to those men losing their lives are going to be held accountable for it.
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